Cayman Islands: Investing
Attracting foreign direct investment is the cornerstone of the planning policy of the country, and the Cayman Islands are renowned for their financial industry and tourism. However, since 2011, FDI flows have been very volatile. Whereas the country is not classified in the 2022 edition, according to the 2021 World Investment Report published by UNCTAD, FDI inflows reached USD 23.6 billion in 2020, down from USD 28.1 billion the previous year, in part due to the crisis triggered by the Covid-19 pandemic. According to the Cayman Islands Monetary Authority’s latest Investments Statistical Digest, the Cayman Islands witnessed an 8% increase in the number of private funds in 2022, with a net number of funds increasing by 1,175 to a total of 15,854. The USA remains the primary destination for Cayman Islands fund managers, with a net increase of over 700 funds added in 2022. Hong Kong, Singapore, and Brazil-based managers continued to exhibit robust growth in Cayman Islands fund formation, despite the introduction of competing beneficial fund structures in the former two jurisdictions in 2020. Despite challenging market conditions for digital assets and rising interest rates, both digital asset funds and real estate funds experienced positive net inflows into Cayman Islands fund vehicles, amounting to USD 8 billion and USD 28 billion, respectively. At 2022 year-end, the Cayman Islands' external financial assets increased to USD 158.9 billion, while its external liabilities were reduced by USD 4.0 million to USD 97.7 billion.
The primary sector attracting FDI to the Cayman Islands is the financial services industry, including banking, investment management, and insurance. The country is home to more than 100 banks and over 15,000 investment funds, making it one of the world's leading offshore financial centres. To attract even more FDI, the Cayman Islands are trying to diversify their economy beyond tourism and offshore financial services. This project was partly implemented via the creation of the “Cayman Enterprise City”, which offers new business services in a special economic zone. The Government has introduced incentives to encourage the setting up of local industries: there are no corporate or income taxes for companies on money earned outside the Caymans’ territory, including interest or dividends earned on investments. A solid legal framework, a lucrative banking and financial service industry, access to professional service providers, a stable political and economic climate, the absence of trade controls, modern infrastructure and advanced communications systems are many of the assets that stimulate and attract foreign investors to the Cayman Islands, which is not ranked in the main indexes concerning the business climate. However, the country has faced criticism from some international organizations, particularly regarding its tax policies and lack of transparency. Nevertheless, In October 2023, the Cayman Islands was taken off the Financial Action Task Force's "increased monitoring" list, and in January 2024, it was additionally removed from the European Commission’s Delegated Regulation (EU) 2024163, commonly referred to as the "EU AML List," effective from February 7, 2024.
| No income tax is imposed on individuals in the Cayman Islands. |
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Latest Update: May 2024
